The cable TV business, for so long a gusher for the media business, is inarguably past its prime.

But does that mean a single company should be allowed to own more than 50 networks and control more than one-quarter of the total revenue pie?

That question, surprisingly, has become central to 12 states’ antitrust lawsuit seeking to block Paramount‘s pending $110 billion acquisition of Warner Bros. Discovery. Cable is one of three areas flagged as monopolies in the making by the state attorneys general, who have filed suit to try to block the deal. The Writers Guild of America has filed parallel litigation citing concerns about the merger’s impact on workers.

Judge Araceli Martínez-Olguín of the U.S. District Court for the Northern District of California, in granting a temporary restraining order lasr week that has paused the deal, said the cable part of the deal needs a closer look. Paramount’s argument that the merger would not give the company more negotiating power with pay-TV operators “fails because it rests on false assumptions regarding activity in the market for licensing basic cable channels to distributors,” Martínez-Olguín wrote in her ruling.

The judge later extended the TRO and then Paramount opted to skip the next stage, which would have been a hearing on a preliminary injunction request, and instead proceed to a full trial. The trial date has not yet been announced.

The emergence in the merger fight of the much-maligned cable bundle, widely deemed (including by Paramount) as essentially irrelevant in a world of streaming and social media, is striking for many reasons. For one thing, the issue was never mentioned by the U.S. Department of Justice in its statement granting approval to the merger earlier this year. For another, the cash flow from cable networks is crucial to Paramount’s plan to pay down the large debt load the transaction will create.

Film In Focus

Instead of cable, the theatrical movie business has been the object of industry and public scrutiny, dating back to when Netflix had a deal in place to buy Warner Bros. before being dislodged by Paramount. And indeed, two film markets – one for wide-release titles, and one for “anticipated top-grossing” (blockbuster) releases – are key elements in the states’ complaint. Media coverage for months has focused on the melding of two major studios into one, with a widely expected shrinkage of the release slate. Paramount, from CEO David Ellison on down, has pushed back repeatedly on that narrative, insisting the combined company would put out 30 films a year.

“Pay-TV may be declining, but it is still a market,” one senior TV executive told Deadline. “Especially with live sports being such a big draw, as we just saw with the World Cup, it isn’t going to go to zero.”

RELATED: World Cup Ratings Were Supposed To Be Big, But THIS Big?! Fox & Telemundo Execs On The Secrets To The Surge

Cord-cutting has shown signs of moderating after years of acceleration, helped partly by more flexible packages offered by YouTube TV and other operators. Spectrum TV parent Charter Communications reported Friday it has shed 107,000 video customers over the past 12 months, which is less than 1% of its footprint of 12.5 million subscribers, in an improvement over comparable prior periods.

Paramount’s defense is being led by Chief Legal Officer Makan Delrahim, who previously headed the antitrust division of the DOJ and led the government’s suit aiming to block the AT&T-Time Warner deal. In a brief responding to the states’ request for the temporary restraining order, Team Delrahim sought to reframe the cable aspect of the deal.

“In Plaintiffs’ alleged market for the licensing of basic cable channels, the merging parties’ channel lineups are complements, not substitutes,” the brief said. “Cable providers and other distributors have licensed, and will license, all of these channels both before and after the merger. As a result, the merger will not increase the combined company’s bargaining power over the licensing of basic cable channels. The basic cable marketplace is declining in the face of increased cord cutting and reduced demand for packages of cable channels. In this environment, every programmer’s bargaining position is diminishing.”

Cable: The New Coal Industry?

Some watchers of the case from both the legal and financial arenas are skeptical of Paramount’s argument, which is known in case law as a “failing market” hypothesis. Sam Weinstein, a former DOJ antitrust attorney who is now a professor at New York’s Cardozo School of Law, said “it is common, and you can go back 50 years, for merging firms to say, ‘We’re not the big, bad guy – we need to merge in order to help rescue this industry.’”

Rich Greenfield of Lightshed Partners has been one of the few deal watchers from the financial sector to flag cable network concentration as a potential snag. “We honestly have no idea what Paramount’s attorneys are describing,” he wrote in a recent blog post. “Every horizontal cable network merger in history has been about increasing leverage with MVPD and vMVPD distributors. That’s the point. The entire rationale for combining CBS and Viacom into Paramount was to use CBS to protect the Viacom cable networks and ‘bend the curve’ on their decline. You cannot argue ‘complements, not substitutes’ in court while telling investors the combination makes the portfolio more of a must-have for distributors. Both cannot be true.”

Paramount is unlikely to prevail with a “failing market” defense, in Weinstein’s view. “The way the courts look at this is, ‘How concentrated is the market? What is the deal going to do to that concentration?’” he said. “All the rest is noise.”

Michael Morris, a media analyst with Guggenheim Securities, offered a different take in a recent note to clients. “Historical precedent provides Paramount a framework for rebutting the structural presumption in declining industries,” he wrote. “The controlling Supreme Court authority,” he added, is a 1974 case, United States v. General Dynamics Corp. In that case, the court opted not to block the merger of two coal producers.

That ruling “established the principle that structural market-share evidence can be rebutted when the underlying market is in decline and when the acquired firm’s future competitive contribution is materially smaller than its historical share suggests,” Morris wrote. A follow-on case that is widely cited is United States v. Baker Hughes, in which D.C. Circuit judge (and now Supreme Court justice) Clarence Thomas decided that current market-share stats “may give an inaccurate account of future competitive conditions.”

While the state AGs say Paramount-WBD would have 27% of total affiliate revenue, Morris calculated it as a bit higher, at 28.5%. The companies’ revenue from affiliate fees, though, keeps shrinking, as does cable’s overall share of TV viewing. The post-merger company would top YouTube’s share of viewing, with nearly 15%, but the overall market is fragmented, Morris notes.

Delrahim hammered away at that point during a recent appearance on The Town podcast. While Ellison and other execs have repeatedly affirmed plans to retain cable, as they did when Skydance and Paramount merged nearly a year ago, the company’s top lawyer insisted that the deal should be evaluated in a broader context. YouTube itself, not even pay-TV arm YouTube TV, should be included in that market analysis along with both subscription and free streaming services.

“MTV does not compete with TNT. CNN does not compete with Nickelodeon,” Delrahim said. “It’s not about the carriage fees, it’s about where that demand is. If you have two different products that are complements with each other, it’s actually efficiency-enhancing. They have to be substitutes for them to come together for you to have a competitive effect.”

A group of former FCC chairs and top agency officials of both parties are calling on current chairman Brendan Carr to end the early review of broadcast licenses for ABC stations, characterizing it as “an assault on free speech disguised as regulatory process.”

In a filing with the FCC on Tuesday, the officials wrote, “The Commission initiated the early renewal process of all eight ABC-owned-and-operated stations one day after the President and First Lady criticized ABC’s Jimmy Kimmel for a joke he made about them.”

They added, “Public reporting and the notice establishing the procedures for this proceeding also suggest that the Chairman has prejudged the outcome of this proceeding and that the Commission may assert the power to terminate the stations’ licenses early. All this betrays that this proceeding is pretext for the Chairman’s continued campaign of suppressing disfavored speech.”

Among those signing on to the filing were Mark Fowler and Dennis Patrick, chairmen of the FCC under Ronald Reagan; Alfred Sikes, chairman under President George W. Bush; and Thomas Wheeler, chairman under Barack Obama.

The FCC under Carr ordered ABC to file renewal applications for its eight owned stations at the end of May, even though the first of the licenses wasn’t set to expire until 2028. Carr has said that the action was as part of an investigation into Disney’s diversity, equity and inclusion policies.

ABC filed for renewal, but characterized the action as “an extraordinary demonstration of power and coercion directed at disfavored editorial voices which sends a clear warning to every broadcaster in America.”

As part of the process, the FCC opened up a public comment proceeding. The former FCC officials noted that two groups, the Center for American Rights and the Media Research Center, called for the agency to deny the stations’ renewal applications.

In their filing, the FCC officials say that the groups “ask the Commission to interfere with the stations’ First Amendment-protected editorial discretion: word choices, fact-checks, time covering certain topics, personnel, and the licensees’ perceived viewpoints. These are not legitimate subjects of FCC regulation. Indeed, the Supreme Court has repeatedly held that the government may not ‘un-bias’ what it thinks is biased.”

So far, more than 141,000 comments have been received in the station renewal proceeding. The deadline for ABC to reply to the responses is Wednesday.

In its petition to deny the licenses, the Center for American Rights cited broadcasters’ public interest obligations. They wrote, “It is likely lots of ink will be spilled in this proceeding focused on the First Amendment rights of Disney. ABC and its allies will ‘attempt[] to drape the mantle of First Amendment protection solely around those in the broadcast industry. This approach ignores the rest of the citizens of this country.’ … ABC’s rights are important, but they are not preeminent. It is the right of viewers of ABC stations which must feature first and foremost in this Commission’s considerations.” Among other things, they argued that ABC does not provide “a balanced presentation of information on issues of public importance.”

The former FCC officials called the agency’s early renewal action “virtually unprecedented.” The FCC also launched an investigation into ABC’s The View and whether it qualifies as a bona fide new program, and exempt from equal time rules. The network also has pushed back on that proceeding, also characterizing it as a retaliatory effort to chill free speech.

The former FCC officials were represented by the Protect Democracy Project, Andrew Jay Schwartzman, Gigi Sohn of G Squared Strategies and Berin Szóka of Tech Freedom.

Other former FCC officials signing on to the filing include Kathryn C. Brown, chief of staff to FCC Chairman William Kennard from 1998 to 2001; Rachelle B. Chong, a Republican commissioner who served from 1994 to 1997; Jerald Fritz, lega advisers and chief of staff to Fowler from 1981 to 1987; Rosemary Harold, FCC enforcement bureau chief from 2017 to 2022; William T. Lake, media bureau chief from 2009 to 2017; Ruth Milkman, chief of staff to Wheeler from 2013 to 2017; Gloria Tristani, Democratic commissioner from 1997 to 2001; and Christopher J. Wright, general counsel from 1997 to 2001.

More to come.

EXCLUSIVE: Jake Webb’s Slash Management (aka Slash MGMT) is moving beyond talent representation by launching a multi-division production studio.

This comes six months after Webb acquired full control of the L.A. business, and will see Slash operating across film and television development, podcast production, modeling and creator-led IP. Today, he said the industry was a “pivotal moment” where talent reps could be “roadmapping the future” of entertainment.

The TV and film biz will focus on developing scripted and unscripted projects that leverage Slash’s roster of more than 120 clients. We hear at least one indie project is already being packaged at Slash.

At the center of the division is Slash Studios, the company’s creative campus and full-service production hub on Sunset Boulevard. The space has been designed to support digital and traditional media production, podcast and music studios, YouTube creator sets, workspaces, glam rooms, lifestyle sets and an event space.

The studio has already launched and is behind original podcast and digital content such as Cool Conversations with Pressley featuring Pressley Hosbach, Basically Besties and The Bop Bible with Adam Barrera. It has also hosted editorial shoots, become a brand activations and live event destination and held release events for Flush Records and Blackbox LA.

Slash noted that its shift beyond management came at a time of upheaval and consolidation in the entertainment industry. It also comes as the value of digital and traditional talent nears parity, giving reps new opportunities to push their clients into new spaces.

Slash has also made a series of hires and promotions over the past half-year, including the addition of theatrical manager Kaelyn Lacey, the promotion of Jerry Barajas to Vice President of Talent, and the hiring of talent manager Mikayla Giroux.

Further changes include the promotion of Sam Lao to talent manager, Gia Sylvester and Kellie Martinez to talent coordinator and the hiring of Dustin Pindeda as studio and creative assistant, as well as Brandon Juarez as in-house art department lead, photographer and creative producer.

“We are at a pivotal moment where the distinction between ‘digital creator’ and ‘traditional talent’ is evaporating,” said Webb, who co-founded Slash in 2019 with Heinz Holba and Karine Roman.

“Slash is positioned to lead the new face of Hollywood, and adding a strategic manager like Kaelyn is essential to that evolution. She shares our passion for storytelling and hunger to develop IP and projects from the ground up. We aren’t just managing careers; we are roadmapping the future of the industry.”

“I’m incredibly grateful to the Slash MGMT team for their guidance and support over the years,” said Hosbach, a Slash-signed singer and actress with credits for HBO Max pilot How to Survive Without Me and Nickelodeon scripted series Erin & Aaron. “I’ve been with them since I was 12, and they’ve helped shape me not only as an entrepreneur and artist, but as a person as well.

“They played a huge role in helping me build my digital business, which allowed me to invest in my music project, and later guided me in developing my acting career. With the right support and opportunities in place, they helped me take the next step in my journey, including booking an HBO Max pilot.”